[Click eStock] "LG Innotek, Surprise Q1 Earnings Expected"

[Asia Economy Reporter Song Hwajeong] Daishin Securities on the 25th raised the target price of LG Innotek from 250,000 KRW to 280,000 KRW, expecting a surprise performance in the first quarter of this year. The investment opinion was maintained as 'Buy.'

Daishin Securities forecast LG Innotek's first-quarter consolidated sales to increase by 41.3% to 2.79 trillion KRW, and operating profit to increase by 65.6% to 291 billion KRW.

Park Kangho, a researcher at Daishin Securities, analyzed, "This is expected to be the highest level for the first quarter, surpassing consensus with a surprise performance," adding, "The background of the surprise performance includes strong sales of Apple iPhones, maintaining high profit margins due to the mix effect of optical solutions, additional improvement in profitability of semiconductor substrates due to the mix effect, and the turnaround to profitability in automotive components."

LG Innotek's annual operating profit this year is expected to reach a record high of 948.2 billion KRW, a 39.2% increase from the previous year. Researcher Park said, "The investment decision in optical solutions (camera modules) has expanded the visibility of sales and profit growth in optical solutions in the second half of this year," and added, "There is also an expectation of 1 trillion KRW, exceeding the company's operating profit (948.2 billion KRW)."

Expectations are also rising for automotive components due to increased orders. Researcher Park predicted, "As LG Electronics pushes to discontinue its MC (smartphone) business and strengthens automotive components (in partnership with Magna), LG Innotek's orders for automotive components will increase and competitiveness will be enhanced," and forecasted, "The revaluation of automotive components will begin with the turnaround to operating profit in the first quarter."